Unchained - The Chopping Block: Why Solana’s Frequent Downtime Doesn't Bother Kyle Samani- Ep. 362

Episode Date: June 13, 2022

Welcome to The Chopping Block – in person at Consensus in Austin! Crypto insiders Haseeb Qureshi, Robert Leshner, and Tarun Chitra are joined by guest Kyle Samani of Multicoin Capital to chop it up about the latest news in the digital asset industry. Show topics: why Kyle believes people are too negative about the macro environment  how the only crypto product with product-market fit is parties what soulbound NFTs are, and what their pitfalls might be why Kyle and Robert have a beef between them why Kyle has a lot of run-ins with other people in crypto how Kyle thinks about Solana’s 12 instances of downtime over the last six months  how this has caused problems for SOL held in cold storage how Kyle and Robert think projects need to make tradeoffs between stability and adaptability why Kyle thinks every layer 1 and 2 will have a major failure over the next several years how Kyle thinks EVM chains are value-destructive how Tarun thinks zk L2s might be better aligned with the Ethereum ethos how Optimism’s market-making partner Wintermute was hacked for $20 million in OP why the hacker returned most of the money how programming language centralization makes sense how the Lummis-Gillibrand bill is a good opening salvo with respect to crypto regulation why they believe that being paid for staking is not the same as being paid a dividend how disclosure requirements could be onerous for small new projects how they think the crypto industry is moving up the learning curve for lobbying  why they believe the Lummis/Gillibrand bill will be changed to target stablecoins and DeFi more   EPISODE LINK   Hosts Haseeb Qureshi, managing partner at Dragonfly Capital https://twitter.com/hosseeb Robert Leshner, founder of Compound  https://twitter.com/rleshner  Tarun Chitra, managing partner at Robot Ventures https://twitter.com/tarunchitra   Guest Kyle Samani, cofounder and managing partner of Multicoin Capital https://twitter.com/KyleSamani?s=20&t=DN1G0CNY7JR11OoXOAFD2g   Show Topics Wintermute Compromise Optimism Foundation statement: https://plaid-cement-e44.notion.site/A-Message-to-the-Community-from-the-Optimism-Foundation-f49b913bb0974d8a854a8bdd409a9dd6 Wintermute statement:  https://gov.optimism.io/t/message-to-optimism-community-from-wintermute/2595 https://www.coindesk.com/tech/2022/06/09/15m-of-optimism-tokens-stolen-by-an-attacker-after-wintermute-sent-wrong-wallet-address/#:~:text=Optimism%20is%20a%20permissionless%20network%20and%20behaved%20as%20intended.&text=Wintermute%2C%20for%20its%20part%2C%20says,make%20the%20protocol%20whole%20eventually.%E2%80%9D Osmosis Hack https://www.theblockcrypto.com/post/150752/osmosis-dex-on-cosmos-exploited-for-5-million-as-validators-halt-the-network https://twitter.com/stake_fire/status/1534598315441913856?s=20&t=VvGyUlOjGSlhXXUwZvKszw Litecoin Delisting https://decrypt.co/102350/crypto-exchanges-delist-litecoin-privacy-feature-concerns Solana outage re: durable transactions (12 serious outages this year, about 2 a month) https://www.theblockcrypto.com/linked/149698/solana-blockchain-suffers-new-network-outage https://solana.com/news/06-01-22-solana-mainnet-beta-outage-report-2 Unchained episode with Andre Cronje about Solana’s downtime: https://unchainedpodcast.com/the-chopping-block-did-andre-cronje-pull-an-epic-crypto-rug-pull/  Cynthia Lummis & Kirsten Gillibrand presents landmark crypto bill Coindesk Coverage:  https://www.coindesk.com/policy/2022/06/07/key-us-senators-introduce-bill-outlining-sweeping-plan-for-future-crypto-rules/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome, everybody. Welcome to the chopping block. Every couple weeks, usually the four of us, now the three of us and a special guest get together and give the industry insider's perspective on the crypto topics of the day. So quick intros, I'm going to go around. First off, we have Turun, the Gigabrain, and Grand Pubod Gauntlet. We have Robert, the Cryptoconistur, and Captain of Compound. There's myself, a sieve. I'm the head, hype man at Dragonfly. And we have today special guest, Kyle, managing partner in Multicoin. I did not think of a clever, clever moutage. Master of Malticoran. I like the alliteration. The Sultan of Solana is another name we could give you. You're really going to all in overlap there. All right. So very quickly, the four of us are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice.

Kyle, how are you doing, sir? You're the only one of us in shorts. Clearly you are the Austin native. It is 100 degrees outside. It is pretty warm. It's pretty toasty. So I'm in shorts and flip-lops. Welcome to Austin guys.

Great to have an event here. I'm used to traveling for events. Welcome to Austin. It's been insanely hot. Austin's great. Yeah. Yeah. It is interesting.

So consensus is usually in New York, which like in the summer is like, it's fine because it's mostly indoors. Doing a, doing a conference where you have to walk long distances to different venues outside in a hundred degree weather is a very interesting choice. Texas Ninja Warrior. Yeah, exactly. They should have done it in a month again. but yeah, June was not a good call.

Yeah, fair enough. Fair enough. Well, I know this is your home turf. You were just telling me about how you take a lot of your calls inside your pool. I mean, it's hot outside, so like, kind of cool off. So that's why your video is never on during Zoom, I see. That's not correct. Yes, it's not.

That's right. That's right. Well, if you were wearing swim trunks as well, he might turn it on. But, you know, it's, yeah. I mean, I can tell that Austin's been very good to you. You look great. Thank you. Having fun.

Y'all look great, shells. Seattle's weather is looking good. Yeah, it's all right. It's up and down. It's up and down. I've been traveling so much. Yeah, I was like, do you even live anywhere? I know, I know.

It's been a lot. But it feels good to finally be in summer where, like, at least in a bare market, it can be warm. You know, you can at least get a little bit of life in you. If it's just like cold and the whole market's collapsing, it's a little rough to take. But you were just telling me that you feel like people are way too. somber about what's going on in macro. Why do you feel that way? Look at the last two recessions, 2000 and 2008.

2000 is more tech localized. In 2000, like, the internet didn't really work super well. And like most people, like normal people genuinely believe like computers and tech and internet. It's kind of like, meh. In 2022, there's actually zero people in the world who do not believe that software is eating the world. Like, actually every human in the world understands this now.

And so, like, that's a pretty important thing of just, like, things will come back, at least in the context of tech. I'm not necessarily broader macro. And then second major difference is, like, in 2008, like, people were like, is my bank going to have money in it tomorrow? And that was, like, a real question that people asked. Like, there's no existential questions here. So, like, I don't know, is the growth, there's real growth rate's going to slow down by two or three percent for 18 months. Like, okay, like, sure. But, like, that's, like, not that bad in the grand scheme of things.

Like clearly March 2020 was much scarier time because we were just like, I don't know, we're all going to die. And that was a question that people were contemplating. But like today, it's just like growth rates are marginally slower for some period. I don't know. It just like doesn't seem that big of a deal. How do you feel about the long-term impact of higher interest rates? Or do you think interest rates are not going to be maintained at a higher level? I mean, look, we're at what, four or five percent now, which like, I guess relative to the last two years is high.

But like on historical, like on any 30-year chart, it's like still quite low. interest rates have been generally declining for like the last hundred, hundred years. Thousand years. Excuse me. Thousand years, right? Maybe we just had the inflection point. The pandemic was the inflection point in that or something. I don't know.

I generally think the reason that's the case is as you democratize access to finance and access to capital, the universe of capital to do to invest in things is growing, which means rates of return are declining. And like society needs to find more productive ways to put stuff to work. The rate at which financial capital is being unlocked to invest in things is clearly still accelerating and crypto actually is accelerating that. So like I generally think interest rates are still trending down in the medium to long term. So you see pretty much all of this is like, hey, it's short term, it's transient, there's like this stuff going on to Ukraine, there's supply chain issues, there's China going offline.

When all this is resolved, it's back on and the party's going to continue. Party never stopped. Party never stopped. If you just come back to Austin, you realize the party's been going on the whole time. I was amazed at the sheer number of people at this thing compared to the last one I went to. The last consensus? Yeah. How many people were at the last one?

definitely not 16,000 or whatever the number that was claimed here. Yeah, it's true. I mean, permissionless was like 8,000, I think. Right. Yeah. That doesn't actually like that big of an event. It was pretty big. I think so.

And then Heath Denver was like 15,000, if I recall. Right, right, right. Well, I mean, they did take three city blocks of lines. I know, I know. Like, that was crazy. The hotel lobby, you can hold like 300 people. It's amazing that there's more people at this conference than there are defi users. That might be the reason why our portfolies are all down, unfortunately.

Robert, fix it, please. Wait, wait, wait. I'm working on. Only thing crypto has been, has the most product market fit for throwing events. That may, unfortunately be true. It might be the number one product. You got to respect the people who like, look, bear market, bull market, they're always making money because they're throwing crypto parties.

Yeah. And it's a good business. But speaking of which, I actually remember, there were some folks during permission lists. So permissionless, it was a crypto conference that took place the week after the terror collapse. And I remember, you know, obviously, you know, the whole world was like, oh, my God, what is going on? Like, crypto's ending. People were, there were talks about people killing themselves and people losing tons of money and whatever. And so it was a really somber time.

And I remember, permissionless was just around the corner. And I was slated to go. And one of our portfolio companies was throwing a yacht party at permission. And of course, like, this stuff gets booked way in advance and, you know, you have to do a lot of setup. And so they were telling us like, hey, guys, we'd love for you to come to our yacht party. And I was like, dudes, you know, it's like, it's a bad time to throw a yacht party. Like, you know, a lot of people lost a lot of money. It's like kind of a somber time.

The industry also, like, you know, if the press sees this, they're going to have a field day with it. So like, you know, I can already see the headlines. And they were like, oh, yeah, see, that's a really good point. We'll make sure not to invite any press. No one will post photos on Instagram. Yeah, exactly. No one. And that's crypto in a nutshell.

That's a crypto in a nutshell. Which is why I respect the crypto party people. Because they understand that the true ethos of crypto is just to have a good time. Nihilism. Wherever prices are going. Of a kind. I'm just surprised we didn't see in the last cycle, we saw a lot of these kind of like mainly useless tokens, like brain trust, not to sing about anyone that's really standing out. But that we're like they have some offline like event or labor.

thing somehow tied and like crypto somehow even though the events keep going there's no event token no one has tried this like crypto event people cried there's a desk token here proof of attendance tokens are vaguely event tokens that's true that's true but they're not like they're not like these like frenzy you know brain trust was a frenzy for a little while before it crashed to earth right yeah it hasn't it hasn't been monetized so much a poaps are a thing but i i don't feel like i don't think patricio would be happy if poops are monetized i just feel like i just feel Proop's soulbound. I assume they're soulbound. Or is that ERC not approved or EIP not approved yet? No, not even close. I think they're sold-bound. I think

self-bound NFTs was a pretty poor choice of marketing personally. Also, I don't think the idea helps that much. So very quickly define soulbound. So soulbound is an NFT that is basically not transferable. So you give it to someone and only that person can have it. They can't move it to another address. So why do you think that solebound NFTs are bad marketing? Oh, I mean, you're just basically saying like, hey, why don't we, reinvent, reinvent identity, but call it soulbound, which to probably like a ton of religious people feels like, like, there's probably some religious personal world. It's like, that's

an attack on my religion because like, your soul should be free or like, I don't know. Like, there is enough people on this planet who believe in enough crazy shit that like, there's got to be I actually think it's great marketing because of the fact that we're all talking about it. Like, there's a lot of blog post Vitalik has written about that I've never talked about with anyone. But it feels like everybody wants to talk about soulbound NFTs all of a sudden. because they wrote this paper. Right, right. But also just like the idea itself

is clearly interesting to people. It's like, it's just such a simple idea. Yeah. Like simplicity is good, but like this is beyond, it's just like, of course there will be NFTs that are not revocable

and not transferable. And like, I don't know why that concept needed more explanation or thinking. Well, I think they also have some like voting component to it where it like has some notion of quadratic voting built in,

which I don't totally understand because there's not a fungible token attached should, but it was like a way of like, if you use them in a cord, in conjunction with the fungible token, you could somehow get some. Right, right, right. There was like,

the main thing was like to prevent civil attacks in these like Gitcoin-like systems, right? Yeah. Because there's tons of that. I mean, Gipcoin in general. And so I think their application was for that, but then, of course, it mainly was portrayed as like non-transferable Lent of T.

Well, yeah, no shit. Everyone who said the word D-I-D, which is like, Bitcoin Maxus and Microsoft. I don't know if you remember the DID spec. The digital identity spec, which would write some amount of data to Bitcoin every 100 blocks.

It never happened, but that thing is a sole amount of T. Well, I think people forget that addresses and private keys are transferable. We brought this up on the show like three or four weeks, three or four episodes ago when we were talking about the ape coin land sale. And people were buying other people's addresses in order to participate. private keys are easily transferred. Like, you know, I think Soulbound is a crazy term because it's not actually bound to an individual. It's bound to an address.

And addresses are more transferable than people think. True. That's true. At the same time, like, I mean, I don't know. I find it hard to get worked up over these things because I'm just like, look, if Soulbound NFTs are good idea, someone will find an application for it and we'll all benefit from it. But probably we're not going to be calling it Soulbound NFTs. will just be like, oh, that thing that we all use. I mean, I think the average user will see it from something like GICC coin,

where it's like, how do you distribute funding in a way that's like not whales taking advantage of it? Right, but I think it's pretty clear that, like, look, if you're going to create an actual KYC solution, it should not be soulbound because people rotate addresses, right? People have multiple addresses or they have multi-sakes or they have whatever, or they lose an address. And then they say, okay, well, I still exist, even though I lost my address. I think the argument is like you have to build up reputation to that particular. Right, but I think any clearly like the right notion of identity that is the the notion of identity we're going to be using in 15 years on chain, whatever the hell that looks like. Clearly we'll be able to survive losing a private key.

Yeah. Right. So if your idea of a soulbound NFT or identity is that it is tied to one private key forever and you build it up over 15 years, that's just not going to work. Yeah, that's true. I assume it's just going to be some weird Oracle service like, Sea Lands. you know that something like CLens is this like Matthew Green

this like photographer from John Hopkins yeah yeah yeah it's like a it's like a KYC solution where like people can verify like some subset of facts they can selectively prove

yeah you can selectively they can selectively prove certain types of queries right right right about like off chain from off chain a testers like right the DMV right yeah this type of stuff that seems way more close to actual

like identity entity than any of these NFT. Yeah. Yeah, certainly. So, okay, I want to jump into the meat of things. So first off, is that I've been informed that there is a long-standing beef between Kyle and Robert. Don't believe.

And I don't know. I don't know the nature of this beef, but I'd love to uncover some of the, you know, some of the pain that's been, that's been, you know, scabbed over. When he mentioned to me before the show, I was like, what is he talking about? It took me like three seconds for it to even come back. Robert knew. Come back to me. Robert new.

I mean, you want to take it away, Robert? I feel like Haseeb is trying to create drama on the show to get like clicks. We need ratings. We need ratings. Yeah, we need ratings. I can see the view count. It is going through.

Right now. It is working in real time. No, the only possible beef is that, you know, very early on in DeFi, when compounded with one of the very first apps, you know, no one knew how the industry would unfold.

No one knew what would work and what would not work. and what the final form factor would be. In fact, we still don't know what the final form factor for DeFi is going to be and how it's going to work. But Multi-Coin had, you know, one or two ideas that compound was not going to be how it works. We invested in DeForest.

Actually, I think it was like March 2020. It was like very right around the time of pandemic starting. And the DeForest team did for Compound V1. There was a bog that was exploited shortly. after based on some, I forget, token contracts back. Tocons are complex. Yeah. Yeah, I am doing.

The BTCI and BTC, yeah. Yeah, so we did fund them. Our thesis, we put it on our blog. It's still on our blog, so you'll check it out two years later. It basically was a Chinese super app was basically the thesis. We had a view back then, and I still think we hold today that generally like, Americans will not build stuff that Chinese people will interact with, and Chinese people will generally not build stuff that Americans will interact with.

I think that's generally consensus-ish. Not strictly true, but generally true. And so our view was like, these guys are going to go build stuff for Chinese retail. Obviously, it didn't work out super well. And compound has thrived. And also, there's like 50 compound forks now. Yeah. So you guys have great cover.

50 a month. Yeah. Okay. Well, I guess you guys. We started. That was very sweet. I saw just a little spark of love. There's always been some spark of love here.

There's always been. And like, I want to say it was probably nine months later or something. You and I started to reengage on telegram or Twitter or something. So, like, it's fine now. Crypto is a small space when you really boil it down. It's true. It's true. But I feel like, Kyle, you tend to have run-ins at some point with almost everybody in crypto.

Everyone. Yeah. There's, like, almost no way. I mean, you've been doing this so long that... I'm just a boomer now. You are. I mean, so I think all of us at this point. Like, once you...

One of these hair's. Yeah. Like, once you stop shaving for these things, that's how you know that you're, like, last-gen. Yeah. So that's... I'm going to something more. What is trying? I know they're actually looking at it.

I'm like, I actually shaved this morning. Are you Zoomer gen? Which gen? I get, I'm trying. I'm trying. That's why.

Alpha, Gen Alpha? Can I get that? Would you, do you agree or disagree with the following statement? Fashion NFTs will be the future of fashion. I don't, I don't know what that means.

I'm trying to like parse that statement and it's not. I'm just telling you that like, false. There's so many people who are like arguing that or like so many, so many people. It's like not so many people. It's like not, some weird niche.

zoomer thing. I see. About like their metaverse character having like I think it will be true to some extent. I think it will be true

to some extent but not. I view the answer this question is the categorical divide between boomer and zoomer. I like this litmus test.

It's very clean. So we were also so we were supposed to get Anatoly on the show and Anatoly wasn't able to make it because he's in Korea doing stuff.

So Kyle, obviously you are the seed investor in Solana You are known by many people as being the first investor to throw your weight and throw your intellectual force. No tattoo, yeah. That we can see. If you go to his pool parties, you get to see the tattoo. But otherwise, we don't get to grace our viewers of that quite yet.

So we naturally had, at various times on the show, we've been critical of Solana at times. Occasionally, very rarely. I, for the record, am the one who is always making sure that these kinds of things. kind of very, like, X is always way better than why claims are hedged. To be clear, to be clear. I think Solana, I think Solana is awesome. We've made a lot of investments on top of Solana. But I also think it's made a lot of mistakes that it's now paying for.

And one of the obvious components of that, so I think we had Andre on, like, what was it, a month ago? I think we had Andre on. Andre basically made some, he made some claim about Salana. Salana's not even a blockchain. It's just like a database and blah. And so we were like, okay, we should bring on somebody who's pro-Salana to go and give the counterpoint. I don't necessarily need to respond to that because it's obviously kind of an outlandish claim.

But in the last, you know, part of the storyline about Salana. So Salana obviously is down alongside everything else. It's down quite a lot from the peak. It's down like $30 something now. And at the peak it was like $2.40. So it's down, what, 80 plus percent? In line with the market. In line with the market.

And most Alt L-L ones are also, you know, suffered roughly the same fate. The thing about Salana, though, is it's had very, very spotty uptime. So this year alone, my understanding is that we've had 12 periods of downtime in this year, and it's June. So basically about twice a month. And the most recent downtimes, which is to give the TLDR, there was basically a bug with what's called durable transactions on Solana. So durable transaction is when normally on Solana, when you want to send a transaction,

you don't use a nonce the way you use on Ethereum, which is like, this is my first transaction, this is my second transaction, this is my third transaction, This is my third transaction, so that the blockchain knows, even if it gets it out of order, what order in which you intended to play these transactions. In Solana, what you do is you specify a particular block, and you can only sort of do that once. That's how you do do transactions to make sure you don't get repeats. But if you're offline, if you're, like, in cold storage and you're, like, in a clean room,

you don't know what the last block hash was, so you can't include a block hash. So Solana has a mechanism for you to do order called durable nonses, which is a way for you to, like, sign a transaction in a clean room, take it out even if you don't know what the blockchain is. And there was a bug in durable nances, which caused consensus failure in Solana, and it went down for like six hours or something. Slana's back up. They disabled this feature. They plan to reinstate it once they do the next upgrade.

But by disabling this feature, that caused most of the custodians that actually hold Salana in cold storage and do this kind of clean room to be unable to move Salon to. So like Coinbase custody, we got a notification that I ended up posting on Twitter. That Coinbase custody can't move Salon. they can take Solana they can you know Falana's staked is still being staked but they can't move it so your Solana is now stuck

if it's in a custodian or in a similar environment where you need durable transactions Is that bullish? Yeah I can't sound I mean you can short so you know you can at least if you feel like you know

it's not not a blockchain for you you can remove your exposure to it but yeah I'm curious to to get your take on the situation about the stability of Solana that we've seen this year. Yeah, so I'm going to zoom out and probably a different framework on how I think about this problem. So Bitcoin, you know, the ideology that has driven Bitcoin for most the last 10 years has been fairly libertarian, digital gold, almost pseudo-anarchy kind of a thing, right?

And obviously there was the block size debate in 2016-17 and the, obviously small blockers won, and like really strongly reaffirmed the like. Very conservative roadmap, change nothing, no hard forks, etherium is not as extreme and like that hard incentive beliefs as Bitcoin but is like directionally aligned with like you know slow changes very slow like don't break it like I think actually the litmus test of like the

Ethereum ideology is assume all the core developers die today every single one of every other in the world the system has to run in perpetuity right and I think that's kind of the bar that they hold themselves to and every time they release an upgrade they kind of operate with the same assumption and I think I think that's one of the core kind of ideological differences is like

Salano's worldview and Anatoly's worldview is, look, and it's going to take us five, whatever, some number of years to get to where we want to go, just get there as fast as humanly possible and, like, make a bunch of mistakes along the way, it's fine. Don't assume that the entire engineering team will die in 24 hours. So I think that's kind of product management ideology difference A. I think that B is kind of like diving down a little more narrowly is, you know, when we were, I was obviously pretty close with the Salana team as they launched two years ago. And when we launched blockchain, the concern was no one will ever use this thing. I was by far the most important concern. And like when they launched it, like there was a launch of known stability problems and like they worked through most of them.

There's obviously still some other stuff they have to do. But like once the blockchain was generally functioning, their priority of the kind of all of the people there was was to get drive usage and started working with the serum team and did a lot of defy stuff. The first few hackathons were all very defy oriented and building out whatever SPL stuff and whatever else they had to do. Then they turn their energy towards Metaplex and NFTs. and did that SpinaMetoplex, then they did Salon of Pay.

They have a couple of other cool new projects they're working on. But like they've generally been expending their resources explicitly on trying to drive growth to get people to use the blockchain. Inevitably, as you drive people to use the blockchain, they will use the blockchain and like inevitably things break. Right. Like generally in the history of software, every time you scale a system 10X as a rule of thumb, something breaks somewhere.

Reads, rights, stability, whatever, right? This is kind of like a known thing. You know, I think what you're seeing now is you're seeing the cost of, of the decisions that were made over the last several years, which was prioritized growth over, like, known, but, like, they knew they needed to do fee markets. They didn't do them. The durable non-sting was known several weeks before it happened to fail, like,

a few days ago. So, like, these were known decisions that were made ahead of time consciously. Hold on, but I'm pretty sure that Anatolia has argued with me on Twitter that Solana does not, should not have few markets. I mean, fee markets are shipping, like, nowish. No, I know, I know. Like this, you know, because a lot of, they faced a lot of criticism about the lack of markets.

But like, for a long time, this was an intentional design choice. It's not like a, it's not like a, oh, whoops, we forgot to ship the fee markets. Right. But like, they change your mind. Like, okay, like, we need that fee markets. So I'm like, go. Right, right. No, no.

So, I mean, clearly, Salon is adapting to the fact that, like, hey, there are these, we're seeing the way in which this thing is breaking out the margin. Yes. And we need to adapt around it. But the story that you're telling is one that, like, look, we basically, we move fast and break things. We're intentionally prioritizing. adoption over stability.

But it does seem to me like this also is not just a story about usage. It's definitely a story about usage in that there are a lot of blockchains that exist today that have hidden weaknesses that will only be exposed when they face really serious usage. And a lot of things are going to break when they receive the kind of load that Solana receives. So I think that's definitely true. And I take your point of that. But it also does seem true that Solana is probably

is probably breaking more than it should. Yes. That also seems true. Yes. And I'm curious, it seems like you agree with that. Yes. Why do you think that is? Yeah.

So one element of problems emerging in downtime is you just grew and that caused you to have problems. But the related part of the point I was kind of getting at was like for the last two and a half years, the primary engineering resources have been, there's a bunch of known things they want to do to improve stability and fees and whatever. And they just had kicked that can down the road. spend energy on trying to drive growth. And so it's just been like a very conscious decision of focus on getting more people to use it instead of identify like going after known bugs. And like, quite frankly, I agree with that decision. I think that was absolutely the right decision.

You can argue that today it may be no longer is the right decision. And like that's a pretty reasonable debate to have. Obviously you have to play a lot of counterfactuals of how the world works out and those are difficult to reason about. But certainly at least for the first 18, if not 24 months after the network launched, which the network is 26 months old, like I think absolutely it was the right decision to focus on growth.

I mean, it's clearly succeeded, right? Right, yeah. It's obviously extremely valuable. Tons of people use it. It's one of the few things that people even know as layer one blockchains besides Ethereum. Yeah. So again, this comes back to the core question.

Actually, you kind of alluded to with Andre, too, of like, what's a blockchain? And like, again, if you assume the entire engineering team will die today and this is the most run in perpetuity, if that's your definition of blockchain, then Slana's not a blockchain. But like, that's fine. Like, that's just not a useful,

definition. What do you mean by that? Like, I mean, again, like, if Ethereum today, if the entire EF and core teams and all the teams around the EF, assume all of them disappeared right now. Yeah, yeah. Ethereum in its current form will run probably in perpetuity. Yeah, so I understand, I understand that point. I'm saying, why would you say that Salon is not a blockchain if the devs die? Like, like, there's a bunch of these things, the fee markets are not live yet, right? Like, there's a bunch of things that they know that they need to get working to scale this thing. The blockchain will stop in like two weeks. Whatever. Something will go wrong. I see. And, like it will stop working. And that's okay. Like, fix the ship. The corollary to Ethereum is like,

okay, you have a thing that doesn't go down, but also like there's still no, it's been seven years and like, is the scaling stuff going to work? Like, I don't know. Like, so you'd have to take the other side of the same coin, right? Right. This is a tradeoff for almost every project in some form. Between the ability to evolve versus stability. And you see it with Solani, you see it with compound, you see it with Bitcoin. Every different project ever makes some choice of where it wants to be on the pendulum. And sometimes it's the right call, sometimes it's the wrong call. I think compound doesn't move fast enough because it's more stable and more resilient than possibly the market should be. Solana is more flexible. And we'll see what the right decisions are. Yeah.

I mean, look, I agree with the core point, which is that all this stuff is a, it's tradeoffs all the way down. And there's no free lunch that you can get. You can make the best calculation that you can. But eventually you have to pay everything down. Right. So you can cut some corners in order to get faster performance, better go to market, better growth. But you have to pay everything back at some point. The question is, what's the price when you have to pay it back?

Yeah. And when you become really big, of course, the price becomes significant. Because when you're a small little blockchain, people don't really care. They don't really care if you're down for a little while. When you're, you know, one of the largest blockchains in existence, which Salana is today, of course, it's disruptive to a lot of defy. There's a lot of TVL. There's a lot of oracles that go down.

There's a lot of blah, blah, blah. So the disruption becomes bigger. And that, you're right, it is tricky. And we're not going to know for another, you know, three to four years what the record is going to show in retrospect. But one of the questions that we got on Twitter was actually asking you about your investment into APTOS. So APTOS, for just very quick TLDR, APTOS is one of the blockchain teams that spun out of the X Libra slash DM slash whatever teams. They're basically building the blockchain that Facebook was going to build that was going to be called Libra, took the tech, are improving it, and they're going to launch their own layer one blockchain.

It's intended to be very high performance. Similar in principle, at least just Solana. The kernel of the question was one, what motivated your investment in? to Aptos, but the kind of the direction that I'd want to take it is, do you think the exact same things will happen to Aptos? Cool. So I'll answer the latter first. Yes, generally, Aptos has the luxury of like they just had an enormous engineering team

with effectively unlimited money for quite some time. That probably will be good for just like fewer problems down the road. Slot on them before the network launch, like those guys were running out of money. You know, like we let us around to keep them alive. Obviously, they didn't have that problem at DM. So they have some luxuries there that, you know, are likely to pay. pay dividends in the future counterfactual cases of things not going down. But directionally, I'll make an extreme statement, every single layer one or layer two without

question will go down substantially both on the rights and the reeds over the next several years as they try and scale. Something will go wrong in the provers. Something will go wrong in the sequencers. Like, it won't just be even RPC layer. Every single one of these things is going to have very embarrassing faceflops in some form or fashion. Totally agree.

Because scaling reads is one thing that's kind of RPC side. But scaling all the rights is like the whole separate set of problems. Comment eight, or actually that was question two. Question one, why do we invest in that this? The answer is like, we like that it looks like Salana. There's all this talk about modular blockchains and L1s and L2s. I don't think L2s have a place in the world and I think they will be used for some stuff. I am quite confident L2s are not the savior to everything.

And so generally I want to maximize throughput at layer one. And then we'll see what L2 stuff happens. So common A and then common B on why we did Aptus. I think one of the things that helps Salah be successful is that it is a unique programming model and has Rust. Although knowing Rust alone is not enough to program in Salana, you need to learn the Salana account systems and data models and whatever. But like one theory I have is that being an EVM chain is actually value destructive. If people just copy paste code from Eclare 1 and paste it in new places and you don't get truly organic developer communities with real intellectual capital forming and building. Solana, you had to have that happen.

And they took some set of opinions and tradeoffs and whatever, like how the system does stuff and compute or whatever. And Move is taking a new set of differentiated opinions on how the core programming model should work. I actually don't know if those opinions are good or bad. I don't actually care. What I care is that they're different. And they seem to prioritize safety in like making it harder to write bad bugs. It's pretty clear that like as crypto enters mainstream, more and more developers will be writing smart contract code. A lot of those developers will be scared that they will write the bug, the line of code that causes a $500 million thing to blow up.

And like, no one wants to be that guy. And if there are people who credibly believe that this development environment is more likely to have a safer code, a lot of people will be attracted to that. Even if the claim itself is actually somewhat dubious. And again, I'm not making particular claims about M-VM versus Slauna. Yeah. But, like, they lean into it. They talk about it. There's a bunch of academics to talk about it.

I think the claims are generally accurate. And I think... I remember you were one of the co-authors on one of the Libra papers. What's your take? I was on the reviewers. Yeah, I mean, I think as a language, it's, like, really, well designed. From my perspective, it's more like, I think

the language is great. I don't, but I don't see that as that much of a moat, perhaps. I think in Salon's case, actually there is more of the, as Antaululay, would say, chewing glass effect of like the account system's fucking hard to deal with. Like, oh, when I run a validator, I have to figure out how to do kernel bypass.

Like, there's like all sorts of like very annoying shit like that. Whereas I kind of feel like move doesn't have as much of that. I feel like the place where you see that happening is Starkware. StarCware has one of the most hilarious program languages because it doesn't have strings yet. So you can't even print a fucking error message.

Just like think about that, right? Like, you have to be really like assembly guru who like can't tell what the fuck's happening ever in order to really write stuff there. And like, I think the ZK stuff will be a little closer in my mind to the Solana kind of eat those. I actually think move is going to, is relatively easy to write code for. I do think people though in these kind of like,

like overly typed systems, it's very hard to get. It will have a little bit of the Cardano slash, you know, Kadina, et cetera, problem of like, you're getting people to learn this like sort of functional language. It has like sort of weird semantics that like don't match like whatever your apparatus is around it, which is like TypeScript or Python or whatever, right? So in my mind, I guess that's, that would be more my claim.

I think like people like the challenge of Solana, whereas I actually, I feel like Move is like a very different subset of people who would be like find that challenging. And I don't think those people are very good at DevOps. And like Solana really attracted these people who are like, I love 99% uptime. I'm like, who the fuck are you people? Like I don't want to be on call 24 hours a day. I don't know why you do. But I and I feel like I feel like move is more like it's like the Ocamel like.

Yeah, very functional. Yeah. Like the household people. So like I do think there is like cultural differences I see. At least that's just from like the technical side. I like Ethereum because I don't think there should have to be DevOps for writing applications that live on a blockchain. Like I think when things are good enough, like you don't have to worry about DevOps or uptime. The layer one people do though.

Geph, Geph developers do. Right. But like the application layer should be at. Separation of concerns? Right. Right. In Solana, though, in the beginning, until Anchor really like started to mature, you basically didn't have that separation of concerns while you're testing. And I feel like that attracted a certain, like it, no matter what you can say, it's like, it's like, it.

attracted the type of person who'd want to be a guest developer. There's a kind of masochism that sounds like forms in early community, like people who go through some shit together. You need something there for whatever it is. In the case of Solana, though, I don't think on a go-forward basis, the core of it is the chewing glass thing, although I totally leads into it and I like it. I think what matters is it's a different development environment

with some unique set of ideas and trade-offs in the programming language and whatever. There's JavaScript people, there's Python people, there's Pylus plus people, there's Russ people. Everyone gets trained on whatever they got trained on. They have some set of biases and beliefs in how they think computers should work. There's interpreticode, native code, right? Like all this. And so I think the idea of like EVM homogeneity is that's the crazy idea. Like you just need to have some different new ideas and models.

And I think Move will be a pretty meaningful benefactor from like the world wants some degree of heterogeneity of just different stuff. I think that's definitely. true and there and there are real trade-offs to the EV obviously the EVM is you know kind of it wasn't even designed by committee it was designed by like one crazy person on a bender yeah so it's like it's very one crazy person who disavowed his creation yeah yeah it's it's you know it's a complicated origin story for like you know the biggest smart contract platform but it works and it's a The format, but like VHS versus Betamax, like, you know, the best format doesn't always win. Yeah, yeah.

And like, in a lot of ways, I think EVM is winning in its own way because, like, it's becoming a format that any blockchain can adopt to have an ecosystem basically out of the game. I, look, I 100% believe that. And I would take the opposite of the claim that you made, which is that, look, the problem with launching a chain with an EVM is that people can just copy and pay stuff and they're all lazy. and nobody reinvents anything. And, you know, that is actually, like, that's why GitHub exists. It's that you can just copy and grab some other guy's thing and then put it on your thing and say, like, great, I'm going to remix it and add something on top.

That's like what created internet culture is the ability to do that, which was extremely difficult before the up into the internet. Now, of course, that means that there's going to be a lot of lazy copies and a lot of lazy forks that don't do anything, just as there are, you know, thousands of forks of every major project that no one cares about and no one needs to care about. Like, the waste bin can be infinitely big, which is the beauty of some of some of the software is that, you know, we're not taking up resources by trying to create another chain with another EVM instance that doesn't end up going anywhere. Totally fine. No one, no one, no resources

are wasted by doing that. But the one person who creates an amazing VM chain that has some great, you know, novel idea in it, or some great application can get a bunch of adoption, have a bunch of tooling, have the collective intelligence of everyone who's been working on the EVM to civilize this otherwise really awful virtual machine into something that feels usable and feels safe and feels predictable, that is really powerful. And it happened already to JavaScript, right? JavaScript is a horrendous language out of the box.

But we've turned it into something like fairly civilized and fairly usable and really, really freaking performant. There's so many functional programmers who are the type of people who love move who are tisking at you. Let them tisk. I mean, it's the most popular language in the world. I think that, I do agree, though, with Kyle's point

that, like, people like the, heterogeneity because like you know somehow you want to like developers love that but I don't think like users love that that's the of course I mean it's opaque to you the users the users want their wallet experiences to be homogenous I actually think they don't like too many weird ux and like that I don't know I don't know how to reconcile like the user side with the dev side the devs are the hipsters the users are like I don't know like mainstream they're normat stream and they don't want they don't want to like keep mixing ux and I feel like ETH did set the standard for what the U.S. should look like.

And now I've, so there is some, some weird thing that I can't kind of reconcile there. Well, so, okay, let's shift subject. So there's been an interesting development lately. Kyle, you were talking about that you don't believe L2s are going to be the savior. Well, so there was an L2 savior moment last week. So optimism, which is right now in the spotlight because they're a layer two, an optimistic role up on Ethereum that recently launched their token. optimism op token.

This token was supposed to get distributed to a bunch of early investors as well as partners. One of those partners was Wintermute, which was a market maker. And so the story goes that Wintermute was supposed to receive 20 million OP tokens to like market make and do stuff. And Optimus was like, yo, here are your tokens. Wintermute was like, cool, we got them. And it was supposed to be a NOSA, a multi-sig that was deployed onto optimism. However, Wintermute never deployed the multisig.

They had the multisig on Ethereum. and they assumed that they could later deploy it to the same address on optimism, but it would be good, that's the address, and obviously nobody else can become our multisig. Well, it turned out they were wrong. Someone else could become their multi-sig, and in fact, that's what happened. An attacker deployed a contract to the address

that was otherwise going to be the nosus safe for Wintermute and took their optimism tokens, as well as a bunch of other random nosesafes that were also eligible to receive Optism AirDrops. The reason why this happened was because of some subtle things around op codes and basically they didn't deploy their NOSA safe in the way that they ought to have using a modern using whatever, create two, which is a more deterministic way to deploy addresses that have the parameters in there so that you know who the owners are before you deploy it. The attacker was then pressured by a bunch of people like, hey, so they stole like 20 million, I think, in OPI tokens.

And the attacker, apparently they sent a message to Vitalik. Vitalik.Eth is the ultimate Ponzi scheme. He gets tied from every single attacker. That's right. So he sent a message to Vitalik in like the little, you know, the, what's it called, memo of the transaction saying like, hey, Vitalik, what do you think I should do? Or something like this. He was like asking Vitalik for advice on how to deal with this situation.

So what he did as presumably penance for his sins, he sent 18 million op back to optimism to return the funds. He sent one million to Vitalik for who knows. why. Maybe Vitalik will return it. Maybe he won't. I'm not sure. And he kept one million for his troubles. I mean, I think part of this was a little bit of like an edge alluding move with the Vitalik piece because, you know, Vitalik's, you know, I wouldn't say he would, he probably would disagree this characterization, but I would say his layer two of choice, the one that's blessed by him based on amount of interaction and talk about it is certainly optimism versus say

arbitram. I think the idea that like the, you know, this type of thing happened. on the blessed so-called L2 this was like a way of like giving a middle finger That's definitely possible It feels like that like even the note the way it was written It was just like so trolling Yeah

I mean we're seeing though I mean we've talked with this before like it's a trend of people Giving back hacks Happens a lot But lean tells me it's not because of a guilty conscience That we keep seeing these hacks return I assume it's that like there was no way for this guy To liquidate 20 million dollars

I mean chain else is that pretty so there's another attack last week which is osmosis had had this huge bug they halted they got the validers to actually halt the chain and it's still halted until they fix this thing they had to venture as well they were like partying well the chain was down i mean you already like like you said you're one chain down party up yeah that's cryptown yeah finally finally we can relax yeah but it's like it's like you know i i in general i think it had they already rescheduled everything like i spoke at this conference so like i i i well you were there? What was the vibe at the

osmosis conference? Not somber. Not happening. There was no one busy in the back room being like, yo, yeah, we're turning it back on, don't worry. Don't invite the press. You're good. Yeah. There you go. There you go. No, I think that

the main thing is the person who did that wrote this tweet apologizing publicly and I was like, wow, did the team like can't you do this? where it was like because it was a validator who was publicly known and they didn't have anywhere to go. So it was like pretty easy to see. They turned $200 into $2 million?

I think they ended up doing five. I think someone wrote the description of the attack is $200 to $2. But the transactions, I think they actually got $5 million. Yeah. And so they, but then they wrote this thing, which was like the most hilarious thing you can read on Twitter. It was like, we were so sorry. We did this because we really wanted to take care of our families. But, you know, sometimes we have, sometimes we have temperament.

temporary lapses in good judgment. And I was like, that's amazing. I'm never going to say I have bad judgment anymore. I'm just going to say only have temporary lapses of good judgment. I was just drunk one night. I broke the whole chain. I broke the chain thinking of my family. But at the most of conference, I did learn a lot, which is chain analysis response time

is like under an hour to like find on some of these things. When you say their response time, like to do what? Oh, like you tell them there was like an attacker. you show the addresses. And they like fan this out to all the exchanges or what? Oh, as in like there, they,

they can, they, they distract the flow funds. Oh, they track the flow funds and like have some ID. I mean, it couldn't have moved that far. You're right,

right. Well, you have IBCs, so you could technically have gone somewhere else. Like, you could have gone to EFMOs than to ETH. That would have been, now that Luna's gone,

there's no, no way back to Eth other than through EFMOs. I see. I thought that was like kind of an interesting thing. And so I think it is actually just like the chain aliceses are way better. people realize. Right, right. That's like the majority of it. And then then it's like, oh, it's a known person. So then like they get a threatening email that's like. So with the with the

osmosis, it doesn't surprise me that like, look, you're doing this in plain sight. Everyone knows who you are. You run a business. You're part of the community. Like, where are you going to go on osmosis to hide? It's pretty stupid. You should have said, hey, sonny, we found the bug. Please pay me a $100,000 bug bounty. Like, what are you doing? This was clearly the right way to handle this. Look, I, it's, yeah, look, I'm sure he has a big family. But in, uh... And many, many lapses. Yeah, but like, at least in optimism, like, it seems like,

optimism, it's like fairly liquid on chain. Like, you could just sell it, you know, turn into ether and then go, you know, take it tornado or whatever. I mean, there's, there's ways to get rid of it, I'd assume. So I was surprised that they gave back what was, I guess, worth like, because two bucks optimism token. I think it's like 80 cents now. Oh, okay, never mind.

All right. I guess I give that back too. Disclosure are optimism investors. Okay, there you go. All right. So, yeah, it's 80 cents. So that would be, what, like $0.15 million? Yeah.

$14 million, whatever, something like that they give back. So, yeah, it seems surprising to me, which tells me that, you know, maybe, I don't know if it's honor or if it's just like they're not financially motivated to that degree. Yeah. I mean, my sense is like, someone has the stats on this, but something like, I think 20, maybe 40% of all the ETH and tornado is, like, known to be stolen funds. It's a huge percentage. And so I think a lot of people are thinking, like, tornado's not going to help me because

just assume everything's going to blacklist it out. Like, yeah, that's a high enough percentage that like, how much plausible than I believe you have? It's like one third chance. I don't know. It's like. Well, you could always be a beta test for Aztec whenever they launch. They just launched something like a day ago. No, no, they unlaunched.

Yeah, I think it's next week. Yeah, yeah, yeah. They unlaunched. Is that a phrase now? Unlaunch. Well, Jason, Calcutta says his launch conference. You can also have an unlaunch conference. Well, I think unlaunch protocol would be hilarious.

I guess our most is unlaunched. It deprecates your already running protocol in like emergency. Well, all right. But also one other thing about this is like, I think this does, to our earlier conversation about like non-native, like non-standardized languages. Even in EVM land where things are standardized, you can't even get cross-chain. I'm counting a layer two layer, layer one, consistency correct,

because the execution environments defer. And so they like, you get this kind of like weird thing where like, yeah, technically they're supposed to be running the same execution environment. But like the data availability is different and like transfer notions are somewhat different. And I only think that's harder in a like a world of like many languages. So that would be my bull case for like one language winning them all is like if in the one language within them all case you still can't get consistency perfectly. like how do you hope in like language translation? Because like that is a really hard problem in computer science.

No, it's definitely true. It's definitely true. But I mean, look, even if there are multiple languages, there aren't going to be that many. So I can believe that like, look, there will be three or four, maybe five. But I doubt there are going to be 12 major languages that define, you know, the major blocions of the day.

So one way or another, even if you have to deal with Paraguize translation, it's not going to be that many that you have to fundamentally solve. So I think it's doable. in the long run, but there's a lot of wood to chop to get there. Okay, so the last thing I wanted to discuss today, so our favorite topic on the chopping block is regulation, as we all know. And so there was a big bill that was dropped just a couple of days ago

by Cynthia Loomis and Kristen Gillibrand. And it's kind of a landmark bill. We haven't really seen a lot of legible proposals for legislation in the U.S. that are actually fully defined framework under which digital assets can be regulated. And that's what this is, and it's also bipartisan, which is pretty unique because usually, you know, crypto is like, oh, the right thing's this, left thinks this, blah, blah, blah, and you can never really get anywhere.

So I'll give you as a highlight. I assume, you know, we were at consensus when a lot of this dropped, so I have to imagine most of us haven't gotten super deep. But here are the highlights. First, sales of crypto that are less than $200 are tax-free. So if you, you know, finally you can use your Bitcoin to buy coffee. This is so bullish for all these tornado cash people who are pulling out, like, very tiny amounts.

Who's doing that? Can you even do that with gas fees? Yeah. Well, the tornado deployed elsewhere, I guess. Okay, yeah. If you look at the buckets you have that you can deposit,

people oftentimes do like multi-witraught at really small size. I assume the people using tornado are not the people worried about the taxing. Something tells me they're probably not paying their share-ed-on-a- I was saying ironically. Okay, okay. They're probably tax loss harvesting is what they're doing. Okay, so let's go.

So there's a de minimis exemption in four taxes. CFTC will be the primary regulator of crypto spot markets. Which is pretty good. Which is great. I mean, Gensler obviously doesn't like us, so the FTC is a lot better. Crypto securities and commodities would be more clearly defined, which would put most crypto assets as commodities. So crypto securities are things that like pay a dividend or are more like equity-like

or they, you know, whatever. Most L1 tokens would be very clearly crypto commodities. And crypto commodities would be regulated by the CFTC. arguably though the L1 token is putting off yield is paying dividends well it's a complicated it's definitely a complicated basket we're reading the bill yeah but they don't know they don't pay dividends they don't pay dividends what L1 pays dividends well staking guild looks pretty well staking it looks like no no no you're also locked up you're also paid later like no I mean like look you can you can get paid yield for doing work for anything right you can get paid yield for dollars that doesn't

make it that's not that's not getting paid dividends dividends In the of itself, ETH does not generate dividends. You can enter into a relationship with the protocol for which the protocol will pay you. That is definitely different than I think it's different when the underlying asset in the case of proof of work stuff is energy slash compute power versus like, oh, I'm providing more of the asset.

Turn the party line. Yeah, yeah, yeah, okay. I'm not even, I'm just saying like objectively, I think you're wrong. Yeah, I agree. Here's why it's not a difference. it would be a dividend if all ether holders got more. Correct.

Because even in proof of stake, you might only have 90% participation or 50% participation. The returns are not going to everybody. The returns are going to the active network validators. Not a dividend. Exactly. Not a dividend. We're team not a dividend.

You guys can go hang out with Gensler. Ether, come on. I'm on your team to see about. Yeah, yeah. Drew, we'll leave it to the sharks. All right, great. Also, you guys remember this, we had that episode with Coinbase

where Coinbase was like, hey, guys, in one of our disclosures, we're going to say that in bankruptcy, blah, blah, blah. People freaked out. They were like, oh, my God, if Coinbase goes bankrupt, all of your money is gone. So there is a clarification that that's not true,

and, you know, customer deposits are not, you know, they're not reachable in a bankruptcy by creditors. For companies that raise money in digital asset sales, those companies would be required to do by annual disclosures about the teams, track record, what's going on,

what the progress is, and these would have to be filed regularly by anybody who raises money in the U.S. And that actually seemed pretty reasonable to me. That seemed like, yeah, that actually seems like what we should be doing

as an industry. Like now, like Masari is kind of like one of the places where that sort of thing happens, but having it be some kind of public database seems honestly pretty great. I don't know.

How many times have you used Edgar? I've never used Edgar. One of the world's worst databases I've ever used. Look, it doesn't have to be Edgar. It can be on chain or something. I'm fine with that. So those are the high level. Wait, there's also the Dow thing, right?

Where Dow's... No, it was more that if you want to get favorable tax treatment, you have to incorporate in some thing. But if you're a Dow and you're not, if you don't want that, you don't have to do that. There's also the staking yield tax policy. So for proof of stakes, systems like Ether, there was that like unsettled legal question where somebody sued the IRS.

Yes. Yes. Because has those people, right? Yeah. Basically, the bill, as I understand, it says, you're taxed when you sell it, not when you receive it. Yeah. There's a huge bill. There was a bunch of other pieces in there. There was something else also about the crypto broker stuff that was introduced in the previous legislation. It's going to be clarified in this bill. There's a lot to it. But that's the high level stuff. And so it would create a ton of clarity where currently there's obviously, a ton of ambiguity and you've got a lot of regulators fighting for territory. What do you guys think about the broad shape of the bill? And I guess the other question is how likely do you think? Well, my personal view is that it's fantastic because it addresses some of the longest

standing open questions in crypto. I don't expect the bill to just pass in its current form. But as the starting point for a conversation at like the legislative level, I think it's the best possible starting point. I'm sure like all legislation that's going to get compromised to death, crazy things are going to be added, removed, tweet. If it goes through, it's not going to look anything like it is proposed today, being proposed by some of the more friendliest members of Congress. Yeah. You know, but seeing that it's a bipartisan bill is like extremely promising. You know, right now, I mean, crypto has generally had Republican support, but seeing, you know, a Democratic, you know, co-sponsor who's going to bring other Democrats in, I think is extremely

positive for the space. And the fact that, you know, you see both sides, like, trying to create proactive legislation to answer all these open questions and all these open questions are the root of why the SEC is focused on enforcement and not, you know, anything else. I think it's incredibly positive. So, you know, I think it'll take a year to two years. for something like this to pass potentially. I don't think it's like the immediate agenda of the administration. There's really hot burning fires that are taking people's time and attention. But if this is where the legislation that will occur starts from,

I think we should all be excited. So what's your over-under on how long it takes for this thing to work through the machine? So I'm not, you know, a political expert. You know, we have consultants who tell us these things. We also forgot to add nothing we say is political advice. Yeah, nothing we say is political advice. I was hoping to dish out some political advice today. Okay, Kyle, what is your political advice?

Apparently, I'm not allowed to share it. No, no, he says his political advice. You're the guest. You're allowed to say anything you want. We're limited. What is political advice? How do you act on political advice? Can I just tell people where they should vote?

You should tell them run for office. I think that's political advice. That's political advice. Exercise your First Amendment and riots, go run for office. Beautiful. Okay, so we have no idea how long it's going to be. If I have to put an over under out there, I'd say it's like 15 months. 15 months.

So you think next fall is when we see something going to get past. This is from crypto. You're telling me we're not going to make a prediction market for this. This is what the game was made for. There will be. There will be at some point. But I think the midterms this year are going to shut a lot of light on how it unfolds. You know, I think frankly, like November's only five months away now.

and the composition of both the House and Senate's going to change potentially, significantly. And I think the prospects for any crypto legislation are going to change dramatically based on the outcome in November. I think, you know, whether this is right or wrong, I think if the Republicans pick up a lot of seats, you might see the timeline for crypto legislation pulled forward, something that does have generally bipartisan support that won't get vetoed. It's funny. Last summer, I thought, the most important thing that was going to be affecting crypto prices with regulation. And now I'm like, I don't know. Like, it almost feels like it doesn't matter.

CPI is the number one. Yeah, exactly. It feels like the only thing that matters is macro and like regulation is like, I don't be fine. So we spend a fairer of time trying to think through this. Actually, I don't think regulation will move prices meaningfully. There's broadly speaking three things that can happen. The worst thing that can happen is like try and ban crypto in whatever form.

possible de-list everything other than Bitcoin and Doge and MyCoyne. Like is kind of like the most extreme version of that, right? Mike Coin got delisted, by the way, this week. In Korea, Korea. Why so? Because they add us in privacy. Apparently the Mimble Wendos. Oh, that's right.

The Mimble and solely only two years late. Oh, my gosh. That's like one extreme. This is just U.S. centric. I'm not commenting elsewhere. That's one thing that could happen. I think everyone kind of agrees that's like a sub 1% probability, like super, super unlikely.

the other extreme is nothing happens. So basically the status quo just perpetuates indefinitely of like, are they securities, are they not? There's this whole song and dance with the foundations and like the teams are mostly in the U.S. And like there's no disclosures and just kind of like everyone just kind of keeps operating. And like, I think the market generally works.

There's like abuses and problems, but like the market is a whole function. And the third option is like something in the middle. This bill from Senator Lammis and from Senator Gillibrand is like pretty squarely like, right there. And like they're trying to say, look, we need some disclosures. Let's not make this going out IPO public process with Dodd-Frank and whatever, all those other rules are, public companies have to go through. Let's reduce disclosure requirements. Let these teams actually function and operate where you can have a 12-person team that can, like, have a public

token and, like, be okay. And, like, make some sensible rules around staking gains and diminish transactions. Like, there's really not a fourth option. And if you think about probability extremes of like the two on either end, those also seem like, one of them seems extremely unlikely. The other one possibly can happen just as a function of inertia and like that's quo bias. But I just generally don't think that like getting disclosure requirements that are reasonable and not too onerous. Like, why is that bad? Now, there's a case that the disclosure requirements are atrocious and screw up everything up, but I actually don't really think that's the case. I think the higher probability outcome is they're just stupid. Like, I don't know, should

compound labs report the same thing as Solana Labs is the same thing as Audius is the same thing as Nova Labs like yeah probably not but like if they'll be forced to conform to some common standard loosely it'll be like annoying and kind of silly but like that's like not that big of the deal I mean the biggest question is you know will the projects that are six hours old you know conform to the same standards and like all the things that get created over a weekend that you know come out of left field, you know, versus everything you just named, are generally venture-backed, larger, established systems. Well, the thing that's also scary about crypto is that a lot of times things that happened

over a weekend end up getting hundreds of millions of dollars and become larger than things that were made, you know, two years ago. Yeah. So that's the thing about crypto is that because it's all software, you've got these crazy power laws that kick into place and exponential growth in short amounts of time. And it's very hard to build a, you know, a very, very. clear regulatory regime around something that behaves that way. So, look, I respect the, I respect the attempt at trying to come up with a framework.

And I'm sure it's going to get bastardized and corrupted over the next couple of years as people play political games with trying to figure out. Who has better lobbyists? Auditors or crypto people? Like, like Ernst and Yon? I've heard that actually the crypto lobbies are really bad. I don't have any particular insight into this, but I've heard this a couple times now. I have some insight here.

And the real witness test here will be November 2022 elections, midterms. There is a growing belief in D.C. That crypto money is big, like much bigger than previously thought. There's a few packs out there now. Disclosure multi-coin does donate to some of those. We have donated personally. I've done it personally, Senator Lummis, Senator Gillibrand. and there's a chance that you see some really big crypto dollars hit midterms.

And if that happens, then I think DC will actually become a lot more pro-crypto-friendly. So here's the claim that I've heard. The claim that I've heard, and again, I can't confirm because I don't know a damn thing about how all this stuff works from inside Washington. But what I've heard is that crypto people basically think that Washington is paid a play. and it's like the efficacy of your dollars depends a lot on how well you actually understand how the system works

and crypto people have a lot of money and very little understanding of how the system works but tech was like that you remember when everyone used to make fun of tech companies for just like being bad at lobbying absolutely I'm sure there's a learning curve I'm sure there's a learning curve but I feel like tech was not committed

to throwing money at it as much as well like crypto people the velocity of the capital flow is way faster I think you're also implying too much homogeneity among crypto people. I think there is a new class of extremely sophisticated actor. I'll just ping out how that FTC is in front of Congress. Like, I don't know, every two months now. And like they're talking about the CFTC, about derivatives and all these things.

Like, they fairly obviously have an extremely sophisticated, nuanced, multi-year plan with contingencies, left-right and right center for everything you can imagine. And like, they're obviously playing the game at many levels. I'm not as close with Coinbase, but I would assume Coinbase is playing a similar game. I can't really speak for any other firm. but like that that's happening and it's happening at I think I think what will become a parent although it's not yet apparent at very large dollar scale. Look, I believe it.

And I've been I've been advocating for like a year ago that people are way underspending on lobbying and like making getting some political representation in D.C. It's taking a while, obviously crypto is scary. So first approximation before this stuff is popular and seems kind of normal and like the kids are using it. it's really scary to have a bunch of, you know, a bunch of, you know, Silicon Valley people with a bunch of money show up and say, hey, we want to get the laws changed. Like, generally, that doesn't, that doesn't tend to reflect well. And so I, look, I don't know a damn thing about any of this. So I assume that this stuff will get better as people learn and they spend money and they figure out what is actually efficacious and what's not.

I mean, the real question to me, though, is like how much of a negative impact was Luna and Tara on, like, the overall. We do have a rule that every episode we have to talk about Tera now. Well, the way I think about it is like how much money did you have to spend to make like X units of impact in whatever political metric you care about? A positive impact. A positive political impact. Free Tera and post-Tera and what's the ratio? How much has changed? I actually think it has changed at least like 5X.

5X? I think five X. So you think that a dollar spent before Terra was five X more impactful than a dollar spent half a tariff? I would hope that the brush is not that broad, that like stablequin things are conflated with securities things. Have you ever talked to Senator? Yeah, I guess you have. He's a proud sponsor of a couple.

I have donated to Senator Lemison Gillibrand. I am optimistic that they will not be all. The baby will not be thrown out with bathwater. The whole Elizabeth Warren's suing pool together or like her... Wait, suing pool together? One of her cronies. Yeah, well, someone who she didn't. her administration or whatever her office.

Oh, I see. By the way, you should donate. The guy is doing a public fundraiser. I bought one of his NFTs. Yeah, yeah. Pooley the NFT. Pulled the NFT. The money goes to the pool together company who's defending the lawsuits. Yes.

Protectify. Yes. Yes. But I just, you know, I just generally think like the baby goes out with the bathwater because the thing governments care about is like mainly money laundering and like because because they've done the reductia

an absurdum to that NFTs don't they don't give a shit about NFTs they only care about anything that looks like funny on stable coins and like base protocol coins they somehow maybe they'll maybe they'll separate them but Luna just destroyed value

you didn't help people once when the value goes to zero you can't like can't laundered anymore it's worth nothing that is true that's true I think I mean look I we were talking about this earlier is that like I don't think that anybody on Capitol Hill has any idea what the hell layer one is, much less that Luna has anything to do with a layer one. I think Kyle's have the same

thing to me. But I just generally think I'm trying to just estimate this ratio, there's like damage ratio. I think I think the primary victims of the the opprobrium that is now facing crypto is going to be on defense. I think that's pretty clear, right? That's the word cloud at the center of what terror was about. And so I think it's going to be a rough year for those parties. And I think they're likely, you know, to whatever degree this regulation or this legislation gets altered before it ends up getting passed, almost certainly it's going to find some way to flagellate anybody who's doing something that looks more like terror. Also, do you think fractionalized NFTs survived the, do you think they'll?

I mean, they're so small that nobody's going to... I don't know, though. The CFTC loves talking about them, given how small... Do they? Yes, a lot. What's the total mark cap of fractalized NFCs? Like... A hundred million? Including Doge?

Oh, okay. Oh, including Doge. Yeah. It's small, but, you know. But it's one of these things that regulators are, like, glommed on to. Because they understand it, right? It's one of the few things in FTs they can understand. It's like, oh, you have this big thing that you put into little pieces, and it's like, I remember that.

Fungibility. Yeah, exactly. You're securitized it. We got it. We know that word. Yeah, exactly. I heard bad things happen once when we did that. So anyway.

All right, gents. Well, we're up on time. Thank you so much, Kyle, for coming and hanging out with us. Thanks, you all for visiting. Yeah, this has been amazing. Signing off, everybody. Peace out. Bye.